Russia's economy is back on its feet

https://www.economist.com/finance-and-economics/2022/05/07/russias-economy-is-back-on-its-feet

by IdEntities • 4 years ago

43 72 4 years ago

oxff3• 4 years ago

I was told the `sanctions` would turn Russia into rubble, instead they ended up improving Ruble's performance, Russia's trade balance & current accounts.

DevKoala4• 4 years ago

Amazing recovery on the rubble vs the dollar. It is trading at the best of it’s 2020 performance and it had been on decline since then. Now it is actually going back to pre-pandemic levels.

I wish I had bought some back when the news were claiming Russia’s economy is finished. I would have doubled my money.

kqr• 4 years ago

As a general rule, when the news say something, people will overcompensate so it's in your interest to act on the opposite.

On the other hand, it's not enough to just be on the right side of the trade: after all, the markets can remain irrational for longer than you can remain solvent.

ido3• 4 years ago

It’s not just about how much money you can make though - buying rubles helps Russia continue policies (hopefully) considered ethically wrong, such as waging war in Ukraine.

andreskytt• 4 years ago

See, that’s a difference between someone born in the USSR and someone born elsewhere. I, as person from the USSR, remember well how the offical rate of the ruble was a meaningless number. In theory, you could sell rubles at that rate. In practice, there would be a strict limit on the amounts, number of transactions and people allowed to execute these trades. You, my friend, would have lost all your money.

iKevinShah• 4 years ago

Amongst other multiple things which happened, this has helped Russia to move away from USD payments to their local currency. Given the chain of events like 40% of all USD printed in 2020, countries moving away from Petro-Dollar to their local currencies - It is a big red flag for USD (in my opinion)

TMWNN2• 4 years ago

I was told the `sanctions` would turn Russia into rubble, instead they ended up improving Ruble's performance, Russia's trade balance & current accounts.

It makes sense in retrospect.

Right now, it is more or less impossible for any Russian to a) use the US dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars, whether via official or unofficial means.

pinewurst• 4 years ago

https://archive.ph/M1lqj

durnygbur• 4 years ago

Russia with it's vast territory is surprisingly self-sufficient and resilient. Their consumers might have shortage of avocados, their oligarchs will have net worth cut from dozens of billions to single billions. They will evolve into something different and then Germany, Netherlands, Italy and others will again start pumping money into it. Unfortunately the true loser is Ukraine. Now they're completely dependent on the western world while being outside of its political and military unions, treaties, and organizations. Resentment of their population can lead back to oligarchy and corruption known from 90s and 00s and return to the vicious circle of misery.

CamperBob2• 4 years ago

It's early yet.

mirntyfirty• 4 years ago

Yes, it seems as though economics is measured in multi-year timeframes.

syntheweave• 4 years ago

The last analysis I looked at noted that a lot of perceived strength in the ruble was manufactured by lowering capital liquidity through controls and freezes. This sets the economy on a path to go haywire later.

We'll see.

sofixa2• 4 years ago

Yep, even the chier of the Russian central bank says so herself, the "fall" is expected in Q3.

Source with more information: https://threadreaderapp.com/thread/1522751751681904640.html

nekitamo• 4 years ago

This. American policy leaders have said they expect at least a year before the bite of sanctions is felt economically. It's too early to comment on their efficacy.

mercy_dude• 4 years ago

This goes to show how inept and inconsistent western leadership has become in terms of policies. Not so long ago, “sanctions don’t work” was the mantra of the political class and Wall Street when there was a trade war with China. And now those same people argued for the most ludicrous types of sanctions that actually hurt their legitimacy long term.

Why would countries with emerging market economies hold their reserves in UST and USD when it can be seized without due process? Rule of law was the last thing west has and the leadership across the board are going out of their ways to destroy its legitimacy.

Another worrying symptom in much of the western democracy is how the court system is becoming complicit in all this. When individuals of Russian origins were getting their assets seized with no due process whatsoever , where was the court system in this? I have no sympathy for Russian oligarchs but law should apply for everyone equally. These types of blanket seize gives state powers to set the precedent which in the future they can apply against anyone. Canada already did this to their own people.

Nevermark• 4 years ago

I doubt that the US, working closely with many other countries, in opposition to an invasion, will move that needle much.

But sanctions for lesser evils, sanctions taken more unilaterally, and sanction changes triggered by the revolving door of US politicians & parties, have given many countries heartburn.

lostmsu8• 4 years ago

Frankly, you are just repeating Russian propaganda here. Pretty much nobody in the world cares about US seizing Russian USD because nobody important is planning a full scale invasion into a neighboring country. I bet you if the UN could vote on that, seizure would be approved almost unanimously.

ghufran_syed• 4 years ago

Does that matter if it’s true? Or should we not consider the possible truth of it because we don’t listen to the “unbelievers”

pasabagi• 4 years ago

nobody in the world cares about US seizing Russian USD

It's a sovereignty issue. Countries don't like to give other countries substantial leverage over them if it's possible to avoid it.

That said, I think the seizures are probably fine, just because there's no real alternative to the USD or EUR as a reserve currency. Doing anything beyond that (spending the frozen funds, for instance) would probably not be fine.

kkfx6• 4 years ago

Frankly you are completely wrong: having touched private property, having violated funding principles of western values have only a meaning: the west can't be trusted. On contrary the fact that both Russia and China have talked stability that means they do their own interests like anyone else, but they are less unreliable than the west.

Western neoliberals have done so much damage to us westerner that we MUST jail them for life for crimes not different than the original nazi ones who happen to be payed effectively by the same cohort of people who rule us today, their crimes are much worse against us than those from others blocks at their own homes and neighborhoods.

Personally as an EU Citizen I have exactly ZERO trust in anything coming from neoliberals, especially from "English world" right now, and I'm not alone seeing the autarchic trend ongoing at any level, from States who try to reshoring to private people who look for as much autonomy as they can. That's in our terms have a name: high treason. Where civil servants act against their own people for saving/favoring a small cohort of rulers. It's nothing new of course, it happen every time in the history but that's is from the point of view of our Democratic values.

nitwit005• 4 years ago

Much of the "sanctions don't work" was looking back at the relatively toothless sanctions put in place before. The new sanctions are hardly toothless.

rich_sasha5• 4 years ago

Furthermore, the post-2014 sanctions did actually bite quite hard. They weren’t designed to obliterate, rather to discourage further action. And they would have done, had Russia acted reasonably.

techsin1012• 4 years ago

to be fair most of trade today is overly interconnected for no good reason, i have seen scenarios mentioned where part is made in brazil, shipped to singapore, then assembled in thailand then shipped to usa. but it somehow comes cheaper than assembling in brazil and shipping to usa because of existing volume or something. but that's very shortsighted. Sure free market is efficient. But what it's not is forward looking. Govt can step in kick start reactions which leads to enough volume from brazil to usa to make that economical as well. but it'd have advantage of less fragile supply chain and more env friendly process....

swagasaurus-rex• 4 years ago

Seems like the low cost of ocean freight, especially compared to the infrastructural costs of rail or road, mean that it's often cheaper to trade with your oceanic neighbors than to even other parts of your own country.

This isn't new, Mediterranean has throughout history linked the Middle East, Egypt, North Africa and Europe through ocean trade routes. These trade routes have, on occasion, collapsed to disastrous effect.

techsin1012• 4 years ago

I mean it happens organically that math works out that way. But there is an opportunity for govt to create geographically closer pipelines of trade in order to better the reliability of supply chain and environmental effect. For example, there is no reason for stuff to go from mexico to thailand just to be assembled. Only reason could be is that there is existing talent that is available to do it, but brazil lacks those skills. But if govt worked with brazil govt to train for those skills and kick-started industry, then the cost might be even more cheaper due to saving on the half the world trip.

riffraff2• 4 years ago

The "back on it's feet" in the title corresponds to "it will not lose 15% of the GDP this year as some economists think, and central bank rate is still at 14% while capital controls are in place" in the body of the article.

I invite everyone commenting to consider how a GDP loss of less than 15% mean that things are fine.

droopyEyelids• 4 years ago

The context for “fine” is that the western world did everything in its power to destroy Russia’s economy and send them into famine and destitution

HWR_143• 4 years ago

the western world did everything in its power to destroy Russia’s economy

It most certainly didn't. ICBMs, for instance, could grind the Russian economy to a halt in 15(?) minutes.

Also, there are still steps to cut off Russian oil and other products that haven't been done because it would cause a lot of suffering.

I think the proper characterization would be that western governments have foregone profits and some convenience to break Russia's economy.

riffraff2• 4 years ago

the western world did everything in its power

the west for the most part didn't ban russian oil and gas, which is the only thing that would have impacted russia's economy massively, so no, of course they didn't.

90% of the sanctions impact specific people, not industries.

You can even still receive money in Russia from abroad, because not even the whole banking system has been disconnected from SWIFT.

kstenerud• 4 years ago

If by "back on its feet" you mean standing on two wobbly, splintered wooden legs infested with termites, then sure.

This is how capital controls work: You control how your currency can be traded, and then of course it closes in on whatever value you've decided upon. Naturally, the value is meaningless and sweeps the underlying problems under the rug, but it makes for great propaganda.

Russia has been a Potemkin village for a long time now in so many ways, and it's embarrassing how they've managed to fool the Western public so spectacularly. It feels like the late 80s all over again...

jjtheblunt• 4 years ago

how they've managed

Perhaps with help from Western propaganda, in turn funded by big Western industries?

poutineman• 4 years ago

I hope everyone realizes this thread is pure premeditated propaganda. These comments are repeating RT and Sputnik rhetoric which is aimed at muddying the waters. Makes sense to target HN since there are influential people who browse this site.

There's nothing about Russia that is "back on its feet". Listen to absolutely any respectable geopolitical expert on the future of Russia and you'll get more or less the same depressing answer.

r721• 4 years ago

Thread: https://twitter.com/samagreene/status/1522751751681904640 (Nitter version: https://nitter.eu/samagreene/status/1522751751681904640)

andy-x• 4 years ago

Official exchange rate is meaningless as you cannot transfer dollars into or out of Russia. Based on some internal sources (not super exact, but still indicative), I think cash exchange on black market is closer to RUR 150 per USD today.

TMWNN2• 4 years ago

A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), occurs when a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina.

Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars, whether via official or unofficial means.

akomtu• 4 years ago

TL;DR Putin is trying to look strong by fabricating the USD/RUB exchange rate, and that's understandable: with his army and even his own body falling apart, that meaningless number is the only thing he still can control.

sofixa2• 4 years ago

There's this Twitter thread in response: https://threadreaderapp.com/thread/1522751751681904640.html

TL;DR: the article is technically kind of correct, but actually very wrong on the substance

Russia's economy is back on its feet

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